The costs and benefits of fixing a house before selling - Case#1
Each year Hanley Wood puts of a report looking at the Cost vs. Value of a variety of home improvement projects. In this article we will look at the Remodeling 2014 Cost vs. Value Report to see what the average costs of fixing a home that is in "rough" shape and what value these repairs might bring.
The report is broken down by region so since we are interested in Eastern MA and Southern NH this is based off the "Boston" area report. Note that this region is defined as the almost exact area of interest noted above (Specifically it is for Bristol, Plymouth, Norfolk, Suffolk, Middlesex and Essex counties in Massachusetts and Hillsborough and Strafford counties in New Hampshire).
We will look at a fictitious case study of a house in need of major work to make it appealing to the retail market. The conclusions based on this will likely not be the same as someone with a house that is more or less market ready and they want to try to boost the value and make it more appealing so it might sell faster.
Case #1: We Love The 80's!
This is a common type of house, the one that was redone in the 1970s or 1980s and has some of those unique period features that are no longer desirable. Kitchens and bathrooms are funky pink or green colors, carpets are big shag, copious wood paneling throughout etc. In addition to the cosmetic issues little has been done with the structure or systems in this 25-30+ year timeframe.
So let's think of what will need to be done to make this house appealing to buyers and will allow the sellers to get close to market value in any reasonable amount of time (let's say less than 60 days on market or 90-110 days from list to close). For this type of house we will do a minor kitchen remodel, a bathroom remodel (I'll assume the fairly common 1 bath room house we see in the area), replace any carpeting, new sheet rock and fresh paint and replacing the roof.
The Roof:
We'll say it is about 28 years old. No major issues with it yet but it is at the end of its useful life and there are some obvious issues like you can see many shingles curling up and while no big leaks there are water marks on some of the ceilings indicating water penetration in some areas. According to the report the average cost of a roof replacement is... Read Full Article at MassHomeSale.com
Comments (4)
I don't know how they determine the costs or value numbers. I went back and looked and don't see any explanation on the methodology to obtain the information.
I agree that some of these costs seem crazy, even for a homeowner markup vs investor pricing.
These guys have been putting this out for years though and I have seen it cited time and again in mainstream articles about doing repairs and remodels on a house. So they have some street cred, and as far as I know are the only ones that publish anything like this. Hard to try to do something like this without using the only data out there...
I will say that I do generally disagree that doing many of these things will return dollar for dollar to the homeowner (even at reasonable prices). You always here that you get less than you pay for almost every job you can do (Though all those articles probably use this data :) ). Only the very inexpensive items like painting are generally said to return more than the cost.
Now note this is generally for the decent house that just needs a little work. When we do work on a junker we are taking a place that nobody will touch and doing a LOT of stuff (at discount pricing usually) to be able to force a nice profit.
Shaun Reilly, over 9 years ago
I am not sure who was responsible for coming up with the repair numbers or the values received for them on the back end, but I can tell you one thing, if this was actually correct, rehabbers would be out of business and agents would never suggest to homeowners to invest any money sprucing the place up before selling. The truth is, these numbers are way off. Even considering a homeowner paying retail pricing rather than an investor who gets good pricing on labor and materials, all of the items mentioned could be done for less and return more. This article shows a net loss to the homeowner, but, in most cases, doing these items will result in a net gain when completed.
Will Barnard, over 9 years ago
Hey @Roy N.
Thanks for reading and commenting.
This is what the report described for the roof:
"ROOFING REPLACEMENT
Remove existing roofing to bare wood
sheathing and dispose of properly. Install
30 squares of 235-pound fiberglass asphalt
shingles (min. 25-year warranty) with new
felt underlayment, galvanized drip edge,
and mill-finish aluminum flashing. Assume
a 5-square hip roof; custom flashing at two
average-size skylights; and custom cap
treatment at vented ridge."
This "Boston" area number was a lot higher than New England in general which was a little over $20K and the national average that was just under $19K.
Also as an investor that knows what he is doing I would NEVER pay close to that much. This includes mostly homeowners that aren't going to get great prices on the work.
This is published on my lead generation website so not any benefit to me to really dig in and discredit high numbers though. :)
Shaun Reilly, over 9 years ago
@Shaun Reilly
$25,138 for redoing what type of roof? .... asphalt shingle, metal, tile?
I just did a 2500 ft^2 5/12 roof for about a third of that ... and, typically, our material and labour costs are somewhat higher than New England.
Roy N., over 9 years ago